Domanus v. Locke Lord LLP

Appeal
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 08 C 4922 -
Manish S. Shah, Judge.

Before
Wood, Chief Judge, and Kanne and Hamilton, Circuit Judges.

WOOD,
Chief Judge.

If the
allegations in the supplemental complaints filed in this case
are to be believed, the defendant law firms and lawyers were
involved in a hornet's nest of ethical violations. The
more difficult question, however, is whether the complaints
state claims under the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. § 1962(d), commonly known
as RICO. Complicating matters is the fact that the alleged
RICO violations all relate to a Polish company, Krakow
Business Park Sp. z o.o. (Spolka z ograniczona
od-powiedzialnoscia which roughly means private limited
company), and its affiliates and owners. See RJR Nabisco,
Inc. v. European Community,136 S.Ct. 2090 (2016). The
district court concluded, in an exhaustive opinion, that
plaintiffs were estopped from asserting certain aspects of
their claim and that nothing in the complaint plausibly
asserted that the lawyer-defendants (which we will call them
unless greater precision is needed) stepped over the line
between representation of their clients and participation in
a RICO conspiracy. We agree that the complaints do not state
any federal claim, and so we affirm the district court's
judgment.

I

This is
not the first time this court has encountered the problems of
the Krakow Business Park. In Domanus v. Lewicki, 742
F.3d 290 (7th Cir. 2014) (Domanus T), we addressed a
different slice of this litigation: a case brought (as this
one is) by Jan Domanus and Andrew Kozlowski, two shareholders
in the Business Park, against Adam Swiech, Richard Swiech,
and Derek Lewicki, the other major shareholders. Domanus
I reached us after a certification under Federal Rule of
Civil Procedure 54(b) to the effect that the judgment was
final, separable from the remainder of the case, and there
was no just reason for delaying the appeal. At that time, the
Swiechs and Lewicki challenged a default judgment of $413,
000, 000 that had been entered against them. The default was
imposed as a sanction for discovery abuse. The plaintiffs
offered evidence showing that they had suffered damages in
the amount of $137, 800, 000. That number was then trebled to
$413, 000, 000 pursuant to 18 U.S.C. § 1964(c).

Critically for the present appeal, the Swiechs and Lewicki
argued in Domanus I that the district court should
have stayed its determination of damages until the
plaintiffs' claims against nondefaulting defendants that
were not involved in the appeal had been resolved-essentially
that there should have been no Rule 54(b) certification
because the judgment was not sufficiently final. We responded
as follows:

Though we have in the past prohibited district courts from
holding a damages hearing against a defaulting defendant when
the same claim remains pending against non-defaulting
defendants, this rule comes from concerns of judicial economy
and inconsistent damages awards. In re Uranium Antitrust
Litig.,617 F.2d 1248, 1262 (7th Cir. 1980). There is no
concern for inconsistent awards here. The plaintiffs have
committed-both in open court and in their briefs-to dismiss
all claims against the nondefaulting defendants if the
judgment against the Swiechs and Lewicki is affirmed.
Accordingly, they will be judicially estopped from abandoning
their firm commitment once we do so. See, e.g.,
Grochocinski v. Mayer Brown Rowe & Maw LLP, 719 F.3d
785, 795 (7th Cir. 2013).

The
scope of the judicial estoppel on which we relied is one of
the issues in the present appeal.

Before
delving much further into the case now before us, it may help
to set out the cast of characters, along with the shorthand
designations we use in this opinion. The briefs present a
bewildering alphabet soup of abbreviations, which we prefer
to avoid.

Plaintiffs (collectively Domanus, unless context requires
otherwise):

• Jan Domanus, shareholder in Krakow Business Park

• Andrew Kozlowski, shareholder in Krakow Business Park

• Krakow Business Park SP z o.o. (now in bankruptcy in
Poland) and its subsidiaries (i.e., KBP-2 SP. z
o.o., etc.), referred to collectively as the Business Park

Original
Defendants (collectively the Swiech Group unless context
requires otherwise):

• Adam Swiech, shareholder in the Business Park

• Richard Swiech, shareholder in the Business Park

• Derek Lewicki, shareholder in the Business Park

Supplemental Defendants (also referred to as the
lawyer-defendants):

• Kubasiak, Fylstra, Thorpe & Rotunno PC. ("the
Ku-basiak ...

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